Ipsen SA

PAR:IPN

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and thank you for standing by, and welcome to the Ipsen Q1 results call. [Operator Instructions] I must advise you that this call is being recorded today, Thursday, the 22nd of April 2021. [Operator Instructions] This presentation is also available at the ipsen.com website.I would now like to hand the call over to your first speaker today, David Loew. Please go ahead.

[David Loew, CEO & Director]

Thank you, operator. Good afternoon, and good morning. I'm delighted to welcome you to our Q1 sales update. I'm David Loew, Chief Executive of Ipsen, and it's a real pleasure to be here today to update you on our performance and outlook.Slide 2. This is our safe harbor statement, which outlines the routine risks and uncertainties contained within this presentation. I also want to mention that all of my commentary on growth will be based on constant exchange rates.Turn to Slide 3. I'll begin with a brief presentation before using the majority of the time to answer your questions. During the question and answer, I will be joined by our CFO, Aymeric Le Chatelier.Slide 4, please. The headlines from the quarter are that we continued to make good sales and pipeline progress. Total sales increased by 5.5% to EUR 659 million, with Specialty Care growing by 6.4% to EUR 612 million. We achieved these results despite the ongoing impact of the pandemic on diagnosis, treatments and patient care. A number of markets slowed down with reduced numbers of tests, hospital visits and new patient starts.Turning to the pipeline, Cabometyx, in combination with nivolumab, received regulatory approval in the European Union last month for the first-line treatment of advanced renal cell carcinoma. While in the near term, we anticipate a data readout in the COSMIC-312 Phase III trial for the combination of Cabometyx and atezolizumab as a first-line treatment of hepatocellular carcinoma.Filing is moving ahead as planned in the U.S. and Europe for palovarotene in FOP. As you know, we communicate on regulatory submission acceptance rather than defining itself. Finally, we are happy to confirm our guidance for the year, given our performance in the quarter.Please turn to Slide 5. Turning to our oncology performance, we delivered 4.9% growth to EUR 495 million and increased market share, all against the backdrop of the pandemic. The resilient performance from Somatuline was limited by a slowing market, impacted by COVID-19, while the comparison was challenging given an element of additional stocking in the first quarter of last year. We were, however, encouraged by further market share gains and our performance in North America stood out.In Europe, national marketing authorizations have recently been granted for lanreotide generic medicine in France, Denmark, Hungary and Latvia. We have not, however, seen any launches yet.Decapeptyl's strong showing was driven by the performance in China, given the soft comparison to last year. We grew Decapeptyl's market share in the period, and we continue to focus our efforts on the 6-month formulation. Cabometyx in monotherapy delivered strong volume growth, mainly from increased market share in second-line across most geographies. We are pleased with the rapid approval of the combination with nivolumab in Europe.Onivyde was particularly impacted by the effects of the pandemic in the U.S., with a number of patients sadly presenting later than they normally would, impacting second line treatments. It is our hope that the recovery from the pandemic will see patients once again getting the right levels of treatment at the earliest opportunity.Slide 6. Outside of oncology, Dysport delivered strong growth of 18.9% to EUR 102 million. Aesthetics outside of Europe drove the performance, while we maintained market share in the therapeutics market that was particularly impacted by the pandemic. The market in Europe is still challenged across both therapeutics and aesthetics.Turning to our consumer health care, the decline of 5.4% to EUR 47 million included reduced Smecta sales, driven by the slowdown of the diarrhea market in Europe. This was partially offset by the recovery in China. The strategic review of the consumer business, which we have declared as non-core, is ongoing, and we have no news to share at this time.Slide 7. I now want to turn to our pipeline. We're excited about a number of potential medicines and indications, and the clinical trials breakdown is contained within the appendix of this presentation. Here, I wanted to draw your attention to several opportunities. In Phase I, a highlight is the long-acting neurotoxin program in aesthetics and therapeutics, where we have recently seen first patient dosing. In Phase III, we anticipate data from the COSMIC-312 trial in first-line hepatocellular carcinoma in the coming months, while there are other Cabometyx opportunities in second-line non-small cell lung cancer and second-line metastatic castrate-resistant prostate cancer.As you may remember, in December, we raised our risk-adjusted peak sales forecast for Cabometyx to above EUR 700 million. For Onivyde in Phase III, a potential interim analysis in second-line small cell lung cancer could form the basis for an accelerated regulatory review, depending on the results and discussions with the FDA. For the first-line pancreatic ductal adenocarcinoma indication, we hope to file in 2023. Based on those 2 new indications, we assume risk-adjusted peak sales of about EUR 300 million for Onivyde.Lastly, filing is moving ahead as planned in the United States and Europe for palovarotene in FOP, as I mentioned earlier.Please turn to Slide 8. We have confirmed our guidance for 2021, which assumes a progressive recovery from the pandemic by the second half of the year. We continue to assume the phased launch of a lanreotide generic in Europe by the middle of 2021 and the limited impact in case of a potential launch of octreotide or lanreotide generics in the United States in 2021. On this basis, we expect total sales growth this year of over 4% at constant exchange rate. The adverse impact of currencies on total sales is now expected to be 2 percentage points based on the level of exchange rate at the end of March. Turning to our core operating margin. We continue -- expected to exceed 30% of total sales in 2021. Our expectation reflects continued investments in R&D, a progressive investment post pandemic to support preparations for Cabometyx and palovarotene launches as well as a focus on delivering efficiencies. We remain committed to our external innovation strategy. This guidance, however, excludes any potential impact of incremental investments from potential transactions. Slide 9. I want to sum up by reminding you of the strategic pillars that will drive sustainable growth of Ipsen. We have made real progress on maximizing our brands so far this year, and this will continue. We are encouraged by the level of growth in the quarter, especially against the backdrop of the pandemic. We're also focused on strengthening our pipeline to sustain our growth for the long term. As you have seen, we do have a late-stage pipeline, but are gearing up our efforts on external innovation with a clear search strategy now and an increased number of hunters. This work is underpinned by the reorganization and the strengthening of R&D operations we have undertaken.Next, by driving efficiencies across the group, we'll support growth investments in our innovative medicines and our pipeline. And finally, we're in the process of building a distinctive organization and culture with a strong focus on sustainability and what truly makes a difference for patients. I want to thank all of my colleagues around the world for their work and execution so far this year, especially in the face of the pandemic. These are colleagues who will continue to focus together for patients and society. Thank you so much for listening. And Aymeric and I will be happy to now take your questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Matt Weston from Credit Suisse.

[Matthew Weston, Managing Director and Co]

Three, if I can. Firstly, on Cabo, a nice uptick in growth in Q1 after a period of, I guess, slower growth where you've previously flagged that patients were stuck "on IO therapy," where the duration was lasting longer, so you were waiting for a bolus to arrive in second line. Is the growth that we saw in Q1, a consequence of that? Are we now seeing a steady stream of patients moving through into second line? Or is there some other explanation?Secondly, on Dysport, clearly, a great number for the quarter. You've highlighted a large contribution from aesthetics. That's always been a lumpy driver of Dysport revenue. I noticed that Galderma also received approval in China. So what's a realistic assumption for subsequent quarters? Is there a bolus of purchasing here? Or is this a realistic run rate? And then finally and quickly, Somatuline in Europe, as we see the generic enter market by market? Are there any particularly dominant revenue markets where we need to be particularly notable. So France, for example, given your heritage or others, where we need to think that, that is Somatuline revenue is more skewed there?

[David Loew, CEO & Director]

Okay. Thank you, Matt. I'll start with your first question on Cabo. So Cabo continues to gain market share in second line, while nivo, especially is moving into first line. Nivo was also used in second line. So by moving up into first line, it frees up space, and we can gain market share there. And yes, there is, of course, always the effect of a little bit of delayed progression, which is great for patients. But I think we start to see now the moving through and unfortunately, the progression of patients into second line. So it's, I would say, a mix of the 2. Regarding your question on Dysport, as you know, we are not guiding forward-looking by brand individually and by quarters. As you have correctly said, aesthetics is mostly driving the sales growth. We also have some sales growth in therapeutics and especially in France and Brazil. But clearly, therapeutics is still much more impacted by the pandemic than aesthetics. And clearly, also with the launch in China, that is starting to become also a sales driver for Dysport where still, of course, relatively smaller because they have just launched. But our expectation surely is that China is going to become also an important market for us.Then regarding Somatuline. Of course, it's the usual suspects, right? I mean, France, Germany, of course, very large markets, no surprise. But you also have, for example, Italy and Spain and U.K. having sizable sales on Somatuline. So we really need to see now what is going to happen. As you have seen, they got the approval in France, yet they have not sold anything yet. And they also need to move through reimbursement processes. So we have to just observe how this is going to pan out and if they actually have an [ off ] drug.

[Operator]

Our next question comes from the line of Richard Vosser from JPMorgan.

[Richard Vosser, Senior Analyst]

So 1 question just on the Advanz approval. And they highlighted, I think, some sort of whizzy new device that they're going to be using. Perhaps you could comment on your thoughts or competitive intelligence on their device firstly versus your device for Somatuline, please? Second question, just on Decapeptyl, a strong recovery in China. We've had a new wave of VBP. I don't think Decapeptyl is on there, but just your thoughts for demand in China and any price pressure or thoughts we should think about going forward?And then finally, just on the recovery or dynamics of Somatuline in the U.S. What sort of recovery time in terms of the growth should we anticipate throughout this year? Is it going to take basically until the end of the year before we get back to sort of normal volume demands there? Just your thoughts there.

[David Loew, CEO & Director]

Yes. Richard, thanks for your questions. On Advanz' new device, I mean, since they have not been in the pharmacy yet, we haven't had the opportunity to have it in our hands, if you want so. What we have, of course, seen is the package insert and the description of the device. The device looks a bit like our former device, which is very thin, and it wasn't so convenient to inject in terms of stability. What they have changed is that they have a piece of needle that needs to be put on, which is hidden. But it's a 4-step procedure to actually prepare the device versus a 2-step with the new device that we have. So for us, that device does not look terribly fantastic. We have to see now once it's in the pharmacies in reality and get also some feedback from patients.On Decapeptyl, China, as you correctly said, volume-based procurement is not in place for the hormonal treatments. We expect this not to happen in the very short term. It could happen in '22 or '23, difficult to say. So we have to see. As you know, we are currently launching the 3 months, and we are listing it in different hospitals around China, and then we're going to bring to the market probably in the second half of 2022, also the 6-month device. So hopefully, we can change that market towards less injections because that's a benefit for the health care system and for patients. Yet we communicated about it. It's not an easy thing to change very strong habits because they have a monthly injection today. And patients sometimes like to see their oncologists on a frequent basis because it reassures them. On the other side, I think Chinese hospitals are overrun, and they don't have enough capacity. So I think we can probably bring value there for China with the 6 months once we get it launched. On the recovery of Somatuline in the United States, it's encouraging to see that Biden has been indeed swift in terms of getting patients and people, I should say, vaccinated in the U.S. with a pretty high speed. So it remains to be seen what happens with the variants, which are circulating. As you know, there is recently a report of also an Indian variant. So it remains to be seen what happens there. But I think we could assume that the market is going to start picking up towards the second half of the year if things remain stable and improve. And we could see that there are more patients in watch and wait and that the intervals between the progression is also increasing a bit. So hopefully, that should really normalize again in the second half.

[Operator]

Our next question comes from the line of Michael Leuchten from UBS.

[Michael Leuchten, Co]

Two questions, please. One, just looking at the growth you've been able to deliver in the first quarter, like 5.5% currency adjusted. That looks pretty good to me. Was that better than you thought the first quarter was going to go? And if so, like how do you read that as the year progresses? Because, obviously, when you set your guidance, you sort of made the assumption first half versus second half in terms of pressure versus easing from the pandemic? And then the second question, just going back to Somatuline generics. Now that there is a generic not launched yet, but approvals in some countries, was wondering if you could comment on how the communication now changes for you? For you, what is going to change from this point onwards as you deal with the regulators, the agencies, the payers in the larger countries?

[David Loew, CEO & Director]

Perhaps if you could elaborate on your second question a bit more, it's not totally clear what your question is when you say how our communication is going to change with regulators and payers? What do you mean?

[Michael Leuchten, Co]

Yes. Just what would you expect would now happen? Like you have your normal process where you have biannual price discussions, you have reimbursement discussions. Do you expect anything will happen from this point onwards already prior to product being on the market, you mentioned that you need to wait and see whether there's enough drug supply. You need to see the reimbursement happening on the generic side. I just wondered if between now and that happening, something could happen to Somatuline already that would impact you before physical generics are in those markets?

[David Loew, CEO & Director]

Okay. Yes. Thank you for clarifying. Okay. So let me start perhaps with the second one since we just had this. I think the learning from the octreotide launch was that it was a bit of a patchy rollout of that launch by Teva. It was -- they picked up sales, then they had stock outs, for example, in France, then they came back. And what we are also observing is that they kind of seem to have stalled a bit in terms of the volumes now since quite a while in Europe. So we do not anticipate beyond the mandatory price decreases that you could get, for example, like in France, once they're really in the pharmacy because there is generic regulations. Beyond that, there are many markets, which don't have these mechanisms. And for example, Germany will be more case-by-case negotiation on the pricing. So we do not anticipate to have a big price impact before they really appear. And before they really are here with larger volumes.Regarding the growth of the 5.5%, it was fairly in line, I would say, with our expectations, perhaps slightly higher but really marginally higher. So in that sense, I don't want to speculate about the guidance now for the, let's say, second half in case Q2 would look differently, et cetera. You really have to observe what's happening. You have seen our guidance is confirmed, and we are confident that we can make that.

[Operator]

Our next question comes from the line of Rosie Turner from Barclays.

[Rosie Turner, Research Analyst]

Three from me, if I may. So firstly, on FOP, in terms of the acceptance of filing. Can you just confirm whether we're going to have to wait for H1 now? Or whether it will be press released when we get that confirmation? And then two on Dysport. So with that growth coming through in China in the aesthetics business, do you think kind of, I guess, a little bit into the future, but it could be this year, do you think that's going to be impactful for margins going forward? And then finally, you have a long-acting neurotoxin. I believe that's now in Phase I. I just wondered if you could give a little bit of a description on where we've got to there.

[David Loew, CEO & Director]

Thanks, Rosie. So on FOP, no, you don't need to wait for the H1 results. We're going to do a press release, once FDA has accepted the filing. So you're going to hear at that moment. Then on Dysport aesthetics in terms of margins, I mean, as you know, we are selling with the margin to Galderma. We don't control exactly what kind of pricing they do in China. So for us, clearly, it's going to generate more absolute margin. I don't want to speculate on the percentage margin, but we have a contract with Galderma. What -- where it's pretty clear on what our financial streams are. So it will depend on how well they are going to do.On the long-acting neurotoxins in Phase I, we have 2 candidates, which we took into the clinic, one has started to enroll the first patient. And what we are hoping is that we're going to have, as the name says, the longer-acting neurotoxin, which acts really significantly longer than what we are observing right now, be it Dysport, or be it, for example, also Revance, which seems fairly similar in our right. And we are encouraged by the animal data that we have seen because in the animal data, you need to -- when you inject into a muscle, you need to watch what happens to the neurotoxin. It should not spread all around in your tissue because if it does that, it can create side effects. And we have not observed that in animals. So that's very encouraging. We have also observed longer duration. So that's encouraging as well. Now we need to, of course, be a bit patient and see what happens with the dosing in these patients. And we are in the first level now of the first dose, and we're going to step up the dose over the weeks and months to come.

[Operator]

Our next question comes from the line of Thibault Boutherin from Morgan Stanley.

[Thibault Boutherin, Equity Analyst]

My first one is on the situation of generics in Europe. I'm trying to understand the dynamic with Teva's launch and what's happening here. I mean, the market share in Germany has not really gone anywhere for a while. In the U.K., I mean, we can't see anything. So maybe it's a channel issue with IQVIA, but we can't see what's happening there. Apparently [indiscernible] [ and Sanitas ] in Spain. And now at the beginning of this year, we are seeing them launching in a bunch of very small countries. So just if you could help us understand what's happening in terms of dynamics and your understanding of the regulation or the pricing or reimbursement or anything you could say that could help us understand the strategy here on that side that [ keeps you competitive at cost ]. And obviously, we are trying to understand how Advanz could behave based on that? Sorry, that's kind of a big first question. And the second one is on your manufacturing capacity for Somatuline, trying to understand the challenge that Advanz and that partner will be facing in terms of manufacturing enough volume to supply the big European countries. Based on your experience, with manufacturing and with CMOs, is it possible that they can partner with the CMO having enough capacity, the type of capacity to supply the large European countries? And if not, once again, from your experience, how long would it take to build that type of capacity?

[David Loew, CEO & Director]

Yes. Thanks a lot. So I can just agree with what you stated. I mean, Germany has been fairly flat, turning around like 35%, U.K. turning around 7%. You have seen the very recent news that apparently, Novartis has a patient support program like we have in the U.K. and that Teva announced that they are now also going to start offering that. It might be that one of the reasons is that they could not penetrate with their generic without the patient support program. So they are -- they seem to have been pushed into a situation where it's fairly atypical for a generic manufacturer to have to provide patient support programs because now suddenly, they need the back office, they need pharmacovigilance, they need medical people, et cetera, they need an agency who does that. That's pretty atypical for a generic manufacturer.And so okay, so we heard that Novartis is going to stop that program beginning of next year. So we will have to observe what happens in the U.K. if Teva can really pull this off. It also means that normally, then your gross margin erodes if you're a generic manufacturer because now suddenly, you have to invest OpEx. And that's not normally what generic manufacturers are doing. So that's going to be an interesting one to watch. Furthermore, as you said, they haven't launched in Italy and Spain, which are, of course, higher volume markets. And as you said, they only were launched in small ones. So it really makes the question why they cannot provide more drug. They seem to have a problem in the manufacturing as it looks like, and they are being sourced by Pharma 10 from what we understand. It has nothing to do with the regulation and the pricing really. It's really linked to the volume they can supply, which then leads into your second question. What we have always said is that the manufacturing of SSAs is not easy. The manufacturing of Somatuline is also relatively difficult because it's a autogel and producing the autogel is a pretty sophisticated process. So you can't just knock on the door of a CMO and go and get more capacity there, you need to really know how to produce that. Now nothing is impossible, of course, in today's environment. So we have to observe what happens there and how Advanz is going to come up with their volumes.

[Thibault Boutherin, Equity Analyst]

And just sorry, just a follow-up question. On your side, Somatuline, how -- can you just give us a rough idea of the split of your manufacturing between your capacity and CMOs?

[David Loew, CEO & Director]

Yes, it's all own capacity.

[Operator]

Our next question comes from the line of Peter Welford from Jefferies.

[Peter James Welford]

A couple. First of all, let me just let me stick with Somatuline for a minute. Just with regards to what you're seeing there in Europe at the moment. And you mentioned Novartis plans to stop its program. And could you perhaps give us some insight into how you're thinking about, I guess, the roll down, I guess, of your commercial infrastructure in Europe for Somatuline? I appreciate it's maybe commercially sensitive. Any thoughts you can give on that would be appreciated.And then also, just with regards to the device. Am I wrong in thinking that all of Europe is now converted to the new device? Or is there a proportion of the market that still uses the old device? And if you could give us any idea of what proportion of patients that is, it would be helpful. Secondly, then, just going back to the long-acting neurotoxins. When I look at those trials, maybe I'm just thinking, they seem like very large Phase I trials, over 400 patients. Are these, sort of, to some extent, adaptive studies? Or how should we think about these? And why is such a large program required for a Phase 1 of the neurotoxin? And then finally, just on business development. Obviously, you had a new head who started a couple of months ago. Now, I think you said you enlarged the organization and it's now rolling out the new sort of strategy and focus. If you can give us any sort of updates in terms of how are you finding the landscape now? What it sort of looks like? I mean your thoughts on current valuation? And with this revised strategy, whether you feel sort of happier hunting in your confidence or can you give us any sort of time line of when we get to see a first deal?

[David Loew, CEO & Director]

Yes. Thanks, Peter. On Somatuline on the commercial infrastructure, so we are going to observe what the volumes really are going to be -- of Advanz going to be able to supply and we will react in an agile way, obviously. We have also the launch of Cabometyx in first-line renal cells. So we can switch infrastructure, of course, also to Cabo. That's already mostly shared infrastructure. And with the upcoming launch and also potentially hepatocellular. So there, we have new products that we are going to push.Then on the device, on Somatuline, that's all already converted. So there is no more old device out there. So it's 100%. On the long-acting neurotoxins, why is it large trials? Because, in fact, it's Phase I, II right? So that's why we are -- we have several steps in these trials. And that is why we are doing a relatively large trial. We also want to make sure that we have enough data to safely go into the Phase III. And then on BD, as you said, we had Philippe Lopes join us in October. And we have kind of reorganized our teams a bit on the hunting side, but also on the contracting side. And obviously, with the new strategy that we have now implemented, we had to readapt a little bit where we hunt. The valuations, as you know, are very high. So we want to make sure that we really go for targets, which we consider make sense. Often these targets are, let's say, not only out of Boston because that's where you have the highest number. But we try to also get a lot in Europe or in China or in other places around the world because ex Boston, I would say, the valuations are still a bit more reasonable.In terms of time line, I don't want to give a time line. You're going to hear from us when we do these deals. Of course, we are very, very active, screening several targets across the pipeline in later stage, but also early stage.

[Operator]

Our next question comes from the line of KC Arikatla of Goldman Sachs.

[Krishna Chaitanya Arikatla, Research Analyst]

I have 2 quick ones, please. On Cabometyx, you talked about expanding market share in second-line this quarter. Are you able to provide any numbers as to what the share was this quarter compared to last quarter or last year, please? And the second one, what was the sales growth of Dysport outside of China, please?

[David Loew, CEO & Director]

So thank you, KC. We are not giving quarter-by-quarter numbers. Typically, we give an update at the Capital Markets Day. But we have continued to grow market share in second line. We see nivo really moving up into first line. And in the markets, where we are not going to yet have the first-line indication because Germany is going to be the first one to launch. And we are in the midst of the launch right now in the first-line combination with nivo. In the other markets where reimbursement discussions take a bit longer, like Italy or Spain. We see that we continue to gain market share also in France and in Germany as well. So we are very happy with the results that we have seen there. On the sales growth outside of China, that's the majority of the sales growth. I mean, again, we are not giving numbers out by markets, et cetera, per brand. But what I can tell you is that it's, by far, the majority of the sales growth is coming mostly from the U.S. and Brazil. So not that much yet from China, as I mentioned before. But my expectation is that China would start to become a bigger growth engine also for the future.

[Operator]

Our next question comes from the line of Sachin Jain from Bank of America.

[Sachin Jain, Managing Director]

A couple of commercial questions, please, as we head into a couple other catalysts. So firstly on COSMIC-312, if you could remind us of potential advantages you see of the regime versus the existing TECENTRIQ Avastin combination? Just how are you thinking about differentiation based on prior doses as we head into the Phase III? And then any color you can give us on how you think about market opportunity, given the slightly slower-than-anticipated TECENTRIQ Avastin launch despite very strong data? I think you've talked about [ 130 million ] market before, but I just wanted to confirm. And then the second question was just on palovarotene. It's a while since we've heard you talk about ultra-rare disease pricing, just as we head into potential approvals, can you just update us on your perspectives on potential pricing there relative to business plans a couple of years ago?

[David Loew, CEO & Director]

Thank you, Sachin. On COSMIC-312, the advantage versus TECENTRIQ Avastin, which are good results. I mean, that's very clear. We have to look at how we are going to perform in the clinic. As you know, TKIs don't only work on [ VEGF ], but on several other mechanisms as well. So our hope is, indeed, that TECENTRIQ and Cabo is going to be to TECENTRIQ Avastin cross-study comparison. How much we will have to see. We have to look at the patient demographics, exactly how they compare in our trial versus their trial. What we can say is that in the markets where they have launched, they actually got some pretty good pick up. So for example, in France, you can see that they have picked up quite nicely. So it's a good regimen, but we're confident that we can beat that regimen, and we have to now just wait for the results. The market opportunity to remind you in terms of the incidences, the second line, third line renal cell is about 13,000 eligible patients in second line and about [ 7,000 ] in third line. First-line RCC is about 20,000 eligible patients. Hepatocellular is roughly half of that. It's about 11,000 patients. And we will have to see what kind of treatment durations are going to be delivered there. Then on palo pricing, we're not communicating prospectively on palo pricing. As we said at the Capital Markets Day, we have to first see precisely what label we are going to get because that is influenced -- that influences the pricing, obviously. We also will have to see how the ultra-rare pricing environment is evolving. So clearly, in the U.S., it's still a very good pricing environment, and patients are getting rapid access to important drugs. In Europe, we will have to see how this works out with the pricing in ultra-rare diseases. So more to come. I think it's too early to communicate around it.

[Operator]

And our last question comes from the line of Delphine Le Louet from Societe Generale.

[Delphine Le Louet, Equity Analyst]

Three question, if I may. Last year, you were talking about reshuffling entirely your commercial approach in China. I was wondering if you can tell us where you are regarding this point? And if the take-up in sales we are seeing in China is a conclusion or the first sign that you are doing far better than you used to do in China in the past?Second question is more about the business in general? And have you seen any new pattern, let's say, designed by COVID regarding prescription, manufacturing, shipping or anything? Or shall we have any attention in terms of cost regarding the months to come?And finally, a question, can we get an update on your strategic review for commercial -- for -- sorry, for health care -- consumer health care, what's the time line?

[David Loew, CEO & Director]

Yes. Delphine, so on the commercial approach in China, we are indeed separating the field forces and concentrating them more on the specialty care business and on the CHC business, so that they can be really focused. We're not going in details on this in an analyst call. But the sales are not the consequence of that, I would say, because it's really the market, which is starting to recover in China. This has been the main reason why China is recovering.On COVID, if I understood your question well, we -- besides the delayed diagnosis, especially of cancer patients, closed centers, which impact, of course, on Dysport, et cetera, we don't see any impact on manufacturing or shipping. And in terms of our cost line, the OpEx line, obviously, you see this with the whole industry, our OpEx are lower than, let's say, normal years because you don't have as many congresses where people go live and have a booth, you don't have all traveling, et cetera. So -- but it's also harder, let's say, to interact with physicians. So I think the costs are going to start to increase again in terms of the OpEx once the consignment happens. When exactly that is? We believe it's going to be gradually happening in the second half. And obviously, we are doing efficiency savings. So you're not going to see us come back on the OpEx percentage levels that you have seen in, let's say, 2018 or '19 because we are confident that our efficiency gains will be impacting there.On the CHC time line, as I said, this is a process where we are not making any comments. It's advancing well. We are satisfied with the strategic analysis, which is ongoing, but no other comments to say to this.

[Operator]

There are no further questions at this time. Please continue.

[David Loew, CEO & Director]

If there are no further questions, I think this wraps up our call. Thank you very much for attending, everybody, and have a good day. Thank you.

[Operator]

Thank you. That does conclude today's conference. Thank you to everyone who's participated in today's call. You may now all disconnect. Thank you, speakers.